Thursday, November 8, 2012

Punishing bad predictions

I've been a little silent on here this week, in large part because I'm really trying hard to avoid talking about the election. That's not because I'm upset with the outcome or thrilled with the outcome or anything of the sort, but more because if nothing else, this election showed me just how deeply divided our nation has become. Our President was re-elected, yes, but re-elected with only 39% of the white vote nationally—Latinos and African-Americans carried the day for President Obama. As much as we may like to pretend that we inhabit a "post-racial America", that statistic would strongly suggest otherwise.

The fact is that there are entire segments of our population—gays, womens, blacks, Latinos—who largely felt that they had little choice in this election but to vote for the incumbent. Whether their feelings were correct or not is largely an immaterial matter—the feelings alone are indicative of just how ill our current political environment has become. Because of this bitter division, I feel that it's best not to weigh in with my personal opinions about the election, expecting that they would simply inflame some readers while being redundant to others. If you've read enough of my blog, you know my political leanings already, and I therefore feel no need to reiterate them at a time when nerves are a bit frayed. I'll revisit them in the not-too-distant future, to be sure. Now just doesn't seem to be the right time.

But what I would like to talk about is predictions, a topic I actually love discussing. As you may remember, I think that the incentive structure surrounding predictions and projections is badly out of whack, which leads us to be inundated with all manner of terrible prognostications. Italy, for one, decided that they'd finally had enough:

Six Italian scientists and an ex-government official have been sentenced to six years in prison over the 2009 deadly earthquake in L'Aquila.

A regional court found them guilty of multiple manslaughter.

Prosecutors said the defendants gave a falsely reassuring statement before the quake, while the defence maintained there was no way to predict major quakes.

The 6.3 magnitude quake devastated the city and killed 309 people.

Many smaller tremors had rattled the area in the months before the quake that destroyed much of the historic centre...

The seven - all members of the National Commission for the Forecast and Prevention of Major Risks - were accused of having provided "inaccurate, incomplete and contradictory" information about the danger of the tremors felt ahead of 6 April 2009 quake, Italian media report.

In addition to their sentences, all have been barred from ever holding public office again, La Repubblica reports.

In the closing statement, the prosecution quoted one of its witnesses, whose father died in the earthquake.

It described how Guido Fioravanti had called his mother at about 11:00 on the night of the earthquake - straight after the first tremor.

"I remember the fear in her voice. On other occasions they would have fled but that night, with my father, they repeated to themselves what the risk commission had said. And they stayed."

Well, that's certainly one way to change the incentive structure surrounding predictions. Since I've often complained that pundits never face any real consequences when their predictions turn out to be wrong, this certainly provides a pretty strong counter-example. Whether or not it's a good thing is a different matter entirely.

Ultimately, if this sort of thing gained traction throughout the world, all that it would really do is give people an incentive to never make predictions of any kind, under any circumstances. That may or may not be a good thing, and it probably takes things too far in the opposite direction.

Ultimately what we all need to do is to take responsibility for our own decisions, rather than outsourcing them to "experts" and taking their predictions at face value. The more we ignore the expertise of the punditry and rely on our own research and intuition, the better off we all will be. We'll be a better-informed, better-prepared, and generally more capable populace, and that's inarguably a good thing. But the more we try to blame others for the bad outcomes that befall us, the further we're going down the wrong path.

Personal responsibility is paramount in the world, and while this ruling may help shift around the incentive structure surrounding predictions, it does absolutely nothing to promote personal responsibility. Therefore, I can't bring myself to support the move, no matter how much I might like certain elements of it. Although, maybe if we used this logic on Ben Bernanke.... nahhhhhhh.